New Delhi, Apr 23 (KNN) Indian startups raised USD 2 billion in funding in the January-March 2024 quarter, according to data from market research firm Tracxn.

While this marks a 40 per cent decline from the USD 3.3 billion raised in Q1 2023, it represents a steady funding environment compared to the previous two quarters.

Funding levels hovered around USD 2 billion in Q4 2023 and Q3 2023 as well, indicating the startup ecosystem has stabilised after a prolonged downturn over the past 12-18 months.

Investors believe the funding winter may finally be thawing, with deal activity expected to pick up pace in the second half of 2024.

"Things had started moving a bit from the end of last year itself. In the seed and early stages, we have seen term sheets and follow-on rounds happening. After the elections, we should see more action in the growth and late stages," said Varun Malhotra, partner at fintech VC firm Quona Capital, reported TOI.

India has already minted two new unicorns in 2024 so far - Bhavish Aggarwal's AI venture Krutrim and fintech SaaS startup Perfios.

However, funding levels are not expected to match the exceptional levels of 2021 when startups raised close to USD 40 billion.

"Investors are cherry-picking deals. We will not go back to crazy funding and valuations. Investors are looking for sustainable business models," said Somshubhro Pal Choudhury from Bharat Innovation Fund, adding new areas like deeptech and AI are attracting investor interest.

Domestic investors and micro VCs supported many early-stage deals in Q1, with funding rising from USD 462 million in January to over USD 750 million in February and March.

While growth and late-stage deals are taking longer to close amid investor scrutiny, players in sectors like quick commerce are negotiating new rounds.

"There will be enough traction in companies raising their first institutional rounds as investors will be able to come in at the right price," said Abhishek Prasad from Cornerstone Ventures, who expects secondary transactions in late-stage companies as well.

(KNN Bureau)